Install

Get the latest updates as we post them — right on your browser

. Last Updated: 07/27/2016

Report: Stop Political Interference in IMF




LONDON -- The International Monetary Fund should be made independent so that its response to financial crises does not risk being driven by the political agendas of national governments, according to a report released Friday.


The study by the International Center for Monetary and Banking Studies in Geneva said the IMF had made costly errors because its board of directors was not strong enough to stand up to outside political interference and to the fund's powerful management.


"In many respects, there's a feeling that the IMF is being used very openly by big shareholders, especially the United States," said Charles Wyplosz, one of the authors of the report and professor of international economics at the Graduate Institute of International Studies in Geneva.


Wyplosz told reporters that loans to Russia and Brazil were prime examples from the recent past of politically motivated decisions that have hurt the integrity of the fund.


He said that although IMF staff opposed fresh lending to Moscow, the U.S. Treasury had pressed hard for it in the interests of political stability in Russia.


"They [the United States] should do it directly and not use the IMF for their diplomacy," Wyplosz said. "The IMF shouldn't go the way of other UN institutions where political interference is happening every day."


The report proposes that the IMF's executive directors, once appointed, be barred from accepting instructions from their governments. They should serve fixed terms and would not be allowed to take up jobs later with their governments.


To counter the perception of excessive U.S. influence, the "supermajority" needed on important IMF votes should be cut to 80 percent from 85 percent.


This would rob Washington, which has a 17.56 percent stake, of its effective veto, the report said.